Feverish Stock Price Reactions to COVID-19

Alexander Wagner and Stefano Ramelli

No 14511, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The market reactions to the 2019 novel Coronavirus disease (COVID-19) provide new insights into how real shocks and financial policies drive firm value. Initially, internationally-oriented firms, especially those more exposed to trade with China, underperformed. As the virus spread to Europe and the US, corporate debt and cash holdings emerged as important value drivers, relevant even after the Fed intervened in the bond market. The content and tone of conference calls mirror this development over time. Overall, the results illustrate how the anticipated real effects from the health crisis, a rare disaster, were amplified through financial channels.

Keywords: Corporate debt; Coronavirus; Covid-19; Event study; Global value chains; Leverage; Pandemic; Sars-cov-2; Supply chains; Tail risk (search for similar items in EconPapers)
JEL-codes: F15 F23 F36 G01 G02 G14 G15 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cfn and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (468)

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Related works:
Journal Article: Feverish Stock Price Reactions to COVID-19* (2020)
Working Paper: Feverish Stock Price Reactions to COVID-19 (2020)
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